Venezuela's state-owned PdV is down to its last drops of gasoline and blendstock, but it has more breathing room on diesel thanks to a loophole in US sanctions and the lopsided structure of the local fuel market.
Wholesale stocks of gasoline, Venezuela's main motor fuel, have been mostly depleted at the 305,000 b/d Cardon refinery, which has emerged as a de facto fuel hub at a time of chronic scarcity. According to a confidential 15 July fuel report seen by Argus, Cardon had stocks of just 15,140 bl of 91-octane gasoline and 1,890 bl of 95-octane grade.
The gasoline stocks have returned to critically low levels after PdV exhausted Iranian shipments that arrived with fanfare in late May and early June, flying in the face of US sanctions that are designed to choke off supply as a part of a "maximum pressure" campaign to force out President Nicolas Maduro.
PdV is producing only around 25,000 b/d of gasoline at Cardon, where repairs aided by Iran and China have had limited results so far. But the blendstock alkylate that was also provided by Iran has also run out, and the report shows that VGO blendstock is low. A separate PdV report obtained by Argus indicates that the company's MTBE production at its Super Octanos plant in the Jose petrochemical complex has been down since February mainly because of a lack of isobutane.
Before the US imposed oil sanctions in January 2019, PdV used to import gasoline and components from the US to supplement domestic production from its refineries, most of which are now out of service.
Venezuela's fresh gasoline shortage is evidenced by the return of lengthy vehicle lines at the dwindling number of service stations that remain open, including stations selling subsidized fuel and others featuring dollarized prices under a new pricing and rationing system unveiled by the government in late May.
In the case of diesel, the fuel report shows Cardon stocks at 217,060 bl, including 20,730 bl with 0.1pc sulphur content and 83,050 bl with 0.7pc sulphur.
PdV is receiving ultra-low diesel imports through crude and debt swaps with Spain's Repsol and Italy's Eni under an unwritten exception to the US oil sanctions. The loophole, which is drawing increasing scrutiny from the US administration, is intended to meet the needs of food distribution, agricultural activity and power generation. Another cargo of diesel is expected to arrive from Spain later this month, according to shipping sources.
Unlike gasoline, diesel is still sold at giveaway prices at the pump, but its road use remains limited, even among distribution companies which often use small gasoline-operated trucks or cars. One beleaguered distributor who has been forced to buy costly black market gasoline told Argus that diesel trucks would be ideal under the circumstances, but only used ones are available for sale at exorbitant prices.
Vital supply
Particularly in the context of the Covid-19 pandemic, diesel is considered vital for small power-generating units, including those that ensure supply to hospitals during frequent blackouts on the grid.
That humanitarian application is the grounds for Indian Reliance's return to lifting Venezuelan crude early this month in exchange for diesel after successfully petitioning the US Treasury's Office of Foreign Assets Control (Ofac), the agency that administers sanctions. Several shipping companies, wary of US sanctions, have also claimed the humanitarian exemption.
Before Venezuela's economy collapsed, gasoline demand hovered around 350,000 b/d, while diesel stood at 200,000 b/d, including power generation.
